TSX, Wall Street rebound in global stock rally as oil prices surge

TORONTO – North American stock markets rallied Friday to shut a week of losses with big gains, propelled by a a lot more than 12 per cent begin crude oil prices.

The March agreement for crude oil increased US$3.23 a barrel to US$29.44.

Toronto Stock Exchange’s S&P/TSX composite index was up 293.87 points or 2.4 per cent at 12,381.24.

In Ny, the Dow Jones industrial average closed up 313.66 points at 15,973.84, while the broader S&P 500 advanced 35.7 suggests 1,864.78 and also the Nasdaq gained 70.67 suggests 4,337.51.The increase in oil prices also helped the commodity-sensitive loonie, which added 0.31 of a US cent to 72.14 cents US.

Federal Reserve chairwoman Janet Yellen’s recent remarks that some global growth appears weaker than initially anticipated also boosted the loonie, said Stephen Carlin, head of equities for CIBC Asset Management. It signals the Fed may not move rates of interest as soon as previously thought.

Friday’s rebound seemed to be partly due to a recent easing of concerns over the liquidity measures that might exist in some European banks, specifically Germany’s Deutsche Bank, he said.

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The bank offered to buy back more than $5 billion price of its very own bonds Friday in a show of financial strength. Investors sold the bank’s stock after it reported an annual lack of 6.8 billion euros in late January. The slide continued after concerns arose about whether the bank could make payments on complex financial instruments due April 30.

Carlin partly attributes to strength in oil prices to recent dividend cuts by a few energy companies, comforting investors that they are beginning to better align operating costs and cash flows using the current price environment.

Carlin also pointed to rumours that OPEC is ready to go over a co-ordinated supply cut as enhancing the day’s oil rally. Earlier in February, rumours that OPEC and Russia would co-ordinate a supply cut helped fuel higher oil prices.

However, as affordable prices still place considerable strain on North American oil companies, many keep capital expenditure cuts. By the end of this season, that should lead to an improved balance between demand and supply, Carlin said.

Elsewhere in commodities, the March agreement for natural gas slipped 2.8 cents to US$1.966 per mmBtu.

However, gold bullion, that has enjoyed a large run-up in recent days amid a general flight to safety, saw the April contract hand back $8.40 to US$1,239.40 a troy ounce.

Markets in China and Taiwan, that have been closed all week for that Lunar New Year holidays, reopen Monday. However, American markets will be closed Monday for Presidents’ Day, as the TSX is closed for Family Day.